Why there is difference in GST percentage while buying home?

Ever wondered about the GST percentage difference in buying home? Searching for detailed reasons for this difference? On this Ask Expert page you can check out the responses provided and understand the reasons for difference in GST.

Some builders are charging 12% GST of carpet area while some of them charging only 8%. While some builders offers with 0% GST. Now what is actual truth. There are some myths also, 12% for under construction buying and 0% for ready possession buying. What is exactly rules for GST in case of property buying and if builder is not ready to follow then whom to contact?

Answers

The rate of GST will depend on the stage of construction of the house at the time of your purchase. If you are purchasing the house after completing the construction and already construction completion certificate is issued, no GST is applicable.if the payment is made in part or full before the introduction of GST, then no GST tax. This is applicable only if you have paid service tax at a rate of 4.5 per cent.GST rate for Under-construction Flats, Properties Or Commercial Properties is 12%.GST On Houses Purchased under the Credit-Linked Subsidy Scheme (CLSS) is 8 per cent.If there is any dispute in this regard you can contact the Registrar or the concerned officer in the GST department.

The rate of GST on buying a house is not straight forward as the input credit available to builder is different depending upon the status and type of construction. The builders will accordingly pass it on to the buyers. The earlier VAT, Service Tax and excise are replaced with the present GST scheme with a provision of input tax credit. The Govt has issued many clarifications in this respect and the present status is as follows -

In case of 'ready to move in' properties where the completion certificate is already issued by the authorities to the builder, there is no GST. The buyer has not to pay any GST.

For the property under construction the actual GST as per scheme is 18% but considering 1/3rd of it as the land value only 12% is charged. So for the under construction flats etc the GST rate is 12% for the buyer.

If the buyer has paid the purchase amount before the GST regime but builder has given him possession now then he need not to pay any GST but 4% erstwhile service tax will be applicable and charged to the buyer.

The Govt has introduced the Credit-Linked Subsidy Scheme (CLSS) to provide affordable houses to the lower and weaker sections of the society. The GST rates on such houses will be only 8 per cent.

If you are buying a flat on resale from a owner then also you need not to pay any GST on it.

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